Seed Investments Grow 400% in One Year to Become the New Series A

A new report from research firm CB Insights suggests that in the Internet sector, the number of seed deals in venture capital has already surpassed the number of Series A transactions, at least in the US.

Even outside the Internet sector, seed VC investments are close to becoming more popular than the Series A deals. It appears that seed investing has been quickly growing since the start of 2010. It grew a staggering 483% in the last 10 quarters. On the other hand, Series A deals have increased by just 51% over the same period.

In the second quarter of 2012, seed investments reached an all-time high. Across all industries, there were 175 Seed VC deals in Q2 2012 as compared to 219 Series A deals.

The gap between the two types of VC deals has been significantly reduced in recent quarters. Only two years ago, for every eight Series A deals, there were just two Seed VC deals. In the first two quarters of 2012, for every six Series A deals, there are now four or more seed VC investments.

The reduction in the gap has been most pronounced in the Internet sector where seed investments are actually outpacing Series A deal activity in quantity as shown in the second graph below. Thus, from all the 175 seed deals in Q2 2012, 111, or 63%, of the deals were from the Internet sector.

Moreover, as we analyze internet deals we see that seed investments have increased 455% from Q1 2010 to Q2 2012, growing from 20 to 111 deals. Over the same period, Series A deals have grown from 58 deals to 107—an 84% growth rate.

Louis Rheaume

Mr. Rhéaume has the scholarity of a doctorate in business administration, concentration in strategic management, innovation management and corporate finance. He holds a Master’s degree in finance. He has numerous years of experience in consulting, strategy, financial analysis and business intelligence, mainly in the telecommunications and computing industries. He has also been a researcher in...
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